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HomeMy WebLinkAboutORD 1990-137 1988-1992COUNTY OF HAWAII STATE OF HAWAII BILL NO. ORDINANCE NO. ~'~ 137 328 A BILL FOR AN ORDINANCE TO AMEND ARTICLE 7, CHAPTER 19, AS AMENDED, OF THE HAWAII COUNTY CODE OF 1983, RELATING TO THE ASSESSMENT AND DEDICATION OF RESIDENTIAL PROPERTIES TO NON-SPECULATIVE RESIDENTIAL USE FOR REAL PROPERTY TAXATION. BE IT ORDAINED BY THE COUNCIL OF THE COUNTY OF HAWAII: SECTION 1. Purpose. The purpose of this ordinance is to enable those owners of real property, who qualify for home exemptions under sections 19-71 and 19-72, to dedicate their property to a Non-Speculative Residential Use and be assessed according to the Non-Speculative Residential Use provisions herein set forth. SECTION 2. Justification. The basic principles of supply and demand have driven real property values in the County of Hawaii upward. Real property tax valuations are based upon market data and recent assessments have increased substantially due in part to the escalation in land development and speculation. The increased valuations have resulted in an increase to the tax burden placed upon property owners. Economic hardships due to increasing taxes are being experienced by many homeowner who have no speculative motive nor any intention to sell their residence in the near future. The Council is alarmed that legitimate owner occupants are being subject to ever-increasing taxes due to impacts on our real property market by foreign investors. SECTION 3. Article 7, Chapter 19, as amended, is hereby amended by adding three new sections to read as follows: "Section 19-58.1. Certain Lands Dedicated to Non-Speculative Residential Use. (a) The term "owner" as used in this section shall mean the fee owner or the lessee of real property with an unexpired lease term of not less than ten years from the date of the petition. (b) Any owner of property who qualifies under section 19-71 and 19-72 for home exemption may dedicate said property to Non-Speculative Residential Use and have that parcel assessed in the manner provided by section 19-58.2, except that a husband and wife, although living separate and apart, shall be entitled to dedicate only one parcel to the non-speculative residential use. (c) Any owner who desires to dedicate property to Non-Speculative Residential Use and to have the property assessed in the manner established by section 19-58.2, shall so petition the director. Upon receipt of any such petition, the director shall make a finding of fact as to whether or not the property described in the petition is qualified for a home exemption pursuant to the terms and conditions of sections 19-71 and 19-72. If the finding is favorable to the owner, the director shall approve the petition and declare the property to be dedicated to Non-Speculative Residential Use. In order to place prospective buyers on notice of the dedicated status and the retroactive tax liability, the petitioner shall within 60 days of the notice of approval of the petition record the -2- notice of dedication in accordance with the procedures established by the bureau of conveyances. The petitioner shall furnish the director with a copy of the recorded notice. Nonrecordation of the notice, within the prescribed period, shall be grounds for disallowance of the dedication. (d) Each petition for dedication shall be for ten-year periods. The owner shall reapply for renewal of the dedication by filing an application with the director on or before September 1 of the tenth year. Upon approval by the director of succeeding dedications, the assessed valuation shall continue to be assessed in accordance with the provisions of the Non-Speculative Residential Use dedication. (e) .The dedication may be cancelled by the owner at the end of any ten-year period without penalty and retroactive taxes. The owner shall provide the director with written notice of the cancellation on or before September 1 of the tenth tax year of the dedication period. (f) The director's approval of the petition to dedicate shall constitute a forfeiture on the part of the owner of any right to use the property in any manner that would cause it to become ineligible for the home exemption as defined and determined by sections 19-71 and 19-72 for a period of ten continuous years. (g) If, during any period of dedication, any breach of the dedication requirements should occur, the special Non-Speculative Residential Use assessment privilege shall be cancelled and -3- retroactive taxes and penalties shall be imposed. Breach of the dedication shall include the sale, transfer, change in land use classification of the property upon a petition by the owner, subdivision of the property into condominium units or separate parcels, or failure to maintain the home exemption status of the property. Retroactive taxes and penalties due and owing as a result of the cancellation shall be a paramount lien on the property. (1) Provided, that the Non-Speculative Residential Use dedication shall not be cancelled if the dedicated property is: (A) Transferred to the owner's heirs by testacy or intestacy, (B) Jointly owned by spouses and upon the death of one spouse ownership is transferred to the surviving spouse, (C) Transferred to a spouse or former spouse in connection with a property settlement agreement or decree of dissolution of a marriage or legal separation, (D) Transferred to a trustee for the beneficial use of a spouse, or the surviving spouse of a deceased transferor, or by a trustee of such a trust to the spouse of the trustor, (E) And the heirs, surviving spouse, divorced spouse, or trustee, within 60 days after receiving title to the property, petitions the director, in writing, to continue the dedication and the property continues to qualify for the home exemption as defined in sections 19-71 and 19-72. -4- (L) Provided further that, except as provided herein, penalties and retroactive taxes shall not be assessed when: (A) A person receives title to property dedicated to Non-Speculative Residential Use by way of testacy or intestacy and does not petition the director to continue the dedication as provided in section 19-58.1(g)(1)(A). (B) The dedicated property is jointly owned by spouses and upon the death of one spouse, ownership is transferred to the surviving spouse, and the surviving spouse does not petition the director to continue the dedication as provided in section 19-58.1(g)(1)(B). (C) The property is wholly or partially destroyed or damaged as a result of fire, seismic or tidal wave, volcanic eruption, earthquake, flood waters and wind or rain storm. The owner shall, if he desires to cancel the dedication for the reasons enumerated above, notify the director of such cancellation by written notice to the director within 60 days of the change. All cancellations shall become effective July 1 of the following tax year, but the property will be assessed in accordance with its appropriate classification as of the assessment date January 1. (h) The director shall prescribe the form of the petition. The petition shall be filed with the director by September 1 of any calendar year and shall be approved or disapproved by December 31, of that year. -5- (i) Upon approval, the dedication shall become effective July 1 of the following tax year, but the assessed value will be determined on the assessment date January 1. The owner may appeal any disapproved petition or cancellation of dedication as in the case of an appeal from an assessment. Section 19-58.2. Non-Speculative Residential Use Assessment. Properties approved by the director for dedication to Non-Speculative Residential Use shall be assessed for real property tax purposes in the following manner: (a) Property, approved for Non-Speculative Residential Use dedication, shall be assessed at the real property tax valuation which existed at the time the petition was approved. This assessment shall be adjusted in subsequent years of the dedication period in accordance with the methodology established in Article 7 of this chapter, however, in no case shall any increase in a particular year exceed the growth rate of the consumer price index. (b) Upon approval by the director of succeeding dedications by the owner of the same property, the assessed valuation shall continue to be assessed in accordance with the provisions of section 19-58.2(a). (c) If any improvements are undertaken on the dedicated property, and such improvements increase the fair market value of the dedicated property, the assessment shall be increased based on -6- the fair market value of the improvements undertaken, however, the assessed valuation for ensuing tax years shall be determined in accordance with the provisions of section 19-58.2(a). (d) If any improvements are undertaken on the dedicated property a copy of the building permit shall be provided to the director by the owner prior to construction. Violation of this reporting requirement will result in cancellation of the dedication and activate payment of retroactive taxes and penalties. (e) Retroactive assessments shall be imposed upon violation of the dedication. The retroactive assessment shall be calculated as the difference between the dedicated value and the highest and best use value or the actual selling price of the property, whichever is higher, retroactive to the date of the current ten year dedication period. The highest and best use value or the actual selling price of the property, at the time of the violation, shall serve as the basis for calculating the retroactive assessment for each of the previous years in the dedication period. In cases where the actual selling price of the property is used as the basis for determining the retroactive assessment, the apportionment of value between land and building shall be determined by the director based upon the respective percentage of each component when compared to the total assessed value in the tax year when the violation occurred. (f) In addition to the retroactive taxes due, a 25 percent penalty shall be imposed on the total amount of retroactive taxes owed. Nothing in this subsection shall preclude the county from pursuing any other remedy to enforce this section. -7- Section 19-58.3. Rules and Regulations. The director of finance may promulgate rules and regulations as may be necessary to administer sections 19-58.1 and 19-58.2." SECTION 4. In the event that any portion of this ordinance is declared invalid, such invalidity shall not affect the other parts of this ordinance. SECTION 5. This ordinance shall take effect on July 1, 1991 to allow property owners to file their petition by September 1 for the initial 1992-93 tax year to which this ordinance would apply. IN ODUCED BY: ~'r `~--vu~" Hilo, Hawaii Date of Introduction: Date of 1st Reading: Date of 2nd Reading: Effective Date: -8- September 19, 1990 October 17, 1990 July 1, 1991